Question

Job Order Costing

The ABC Company builds residential housing. The company started operations on June 1^st, 2018. Below are transactions that occurred in the first month of operations (June 2018)

Journal Entries:

June 1) ABC Company sold common stock for $1,500,000 in cash. The company issued 15,000 shares of $100 Par stock.

June 2) ABC Company purchased $300,000 of building materials. Paying $100,000 cash and the rest on account due in 45 days. No credit terms were given.

June 3) ABC Company purchased construction equipment for $240,000 cash. The company uses the straight line method of depreciation. The equipment has a useful life of 9 years and a residual value of $24,000.

June 4) ABC Company started construction on 3 homes (Job 100, 101, 102) by requisitioning the following materials: The materials were delivered to the job sites.

Job Number	Direct Materials	Indirect Materials
100	$50,000	$2,000
101	$30,000	$1,000
102	$25,000	$1,500

June 14) The following direct labor was used and paid for during the period ($30/hour):

Job Number	Amount	Hours
100	$33,000	1100
101	$27,000	900
102	$22,500	750

Predetermined overhead rate calculated May 8, 2018

(Estimated Total Overhead Costs) / (Estimated Direct Labor Hours)

($24,000) / (3000 hours) = $7 per direct labor used

June 21) Job 100 is completed and ready for sale.

<Requirement>

1. Prepare a Classified Balance Sheet

<If there is a certain information needed, please leave a comment>

Answer 1

Jounal entries:-

1. On 1st June 2018:-

Dr. Cash a/c $ 1,500,000

Cr. Equity share capital $ 1,500,000(15000 * 100)

2. On 2nd june 2018:-

Dr. Purchases $ 300,000

Cr. Cash $ 100,000

Cr. Creditors $ 200,000

3. On 3rd June 2018:-

Dr. Equipment $ 240,000

Cr. Cash $ 240,000

CLASIFIED BALANCE SHEET OF ABC Co. AS AT 30TH JUNE 2018:-

ASSETS

Current assets

1. Cash 1,600,000

2. Inventory 195,000(300000 - 105000)

Total current assets 1,795,000

Fixed assets   

Equipment   240,000

Accumulated depreciation (2,000) (240000 - 24000) / 9 * 1/12

Total fixed assets 238,000

TOTAL ASSETS 2,033,000

LIABILITIES

Current Liabilities

Accounts payable 200,000

TOTAL LIABILITIES 200,000

EQUITY

  Common stock 1,500,000

Total owners equity 1,700,000

TOTAL LIABILITIES AND OWNERS EQUITY 1,900,000